US economy likely to create some jobs
Companies likely added a small number of jobs last month, but hardly enough to bring much relief to the nation’s 15 million unemployed.
On Friday, the Labor Department will issue the final monthly jobs report before the midterm congressional elections. The report is likely to leave President Barack Obama in a precarious position: Democratic members of Congress will face voters with unemployment likely above 9.5 percent.
Economists estimate private employers added a net total of 75,000 jobs in September. But they expect that number to be offset by the loss of an equal number of temporary Census jobs. Overall, economists expect no change in the nation’s total payrolls.
The unemployment rate is projected to rise to 9.7 percent from 9.6 percent, according to a survey of economists by Thomson Reuters, as more people look for work. People who are out of work aren’t counted as unemployed until they actively look for a job.
Economists see few signs that the jobs situation will improve anytime soon.
“There’s not much growth going on in the economy right now, so that doesn’t give employers much reason for hiring,” said Nigel Gault, an economist at IHS Global Insight.
Gault said he expects the pace of job creation to remain similarly weak for the rest of this year. Some economists say the unemployment rate could top 10 percent by next year.
The economy expanded at a scant 1.7 percent annual rate in the April-June quarter. Most analysts think growth was similarly weak in the July-September quarter.
Since the recession ended in June 2009, the economy has grown 3 percent, according to economists at Deutsche Bank. That’s less than half the average 6.5 percent pace in postwar recoveries.
Some encouraging signs did emerge in government reports Thursday. For the fourth time in five weeks, fewer people applied for unemployment benefits. The number who did so fell to the lowest level since July.
And job openings rose in August for the second-straight month, to 3.2 million.
But neither figure is strong enough to signal broad gains in job creation. Employers advertised 4.4 million job openings in December 2007, when the recession began.
“The data that we’re seeing is still consistent with a very slow jobs recovery,” said Michelle Meyer, an economist at Bank of America Merrill Lynch.
Weak job growth will likely force the Federal Reserve to take further steps to boost the economy. Most economists expect the Fed to act next month to buy government debt to try to lower interest rates and spur more borrowing.
The unemployment rate can rise even when the economy is adding jobs — if the jobs aren’t enough to keep up with the growing population. Private-sector job creation in September will likely to fall below the 125,000 net new jobs needed just to keep up with population growth. That growth stems from young people seeking their first jobs and new immigrants looking for work.
Even more jobs will be needed to absorb many of the 1.1 million Americans who have stopped looking for work and won’t resume their search until hiring picks up.
The Federal Reserve Bank of San Francisco estimates that employers would have to create as many as 300,000 net jobs each month to reduce the unemployment rate to 8 percent within two years. That figure takes into account both population growth and the return of some discouraged job seekers.
Source: AP